Wayzata couple guilty of five counts of theft by swindle

Thursday, August 21, 2014

Philip and Virginia Carlson were each found guilty of five counts of theft by swindle in which they took hundreds of thousands of dollars from an office development project in Orono that was never completed, Hennepin County Attorney Mike Freeman announced Thursday.

The Hennepin County District Court jury returned the verdict Wednesday morning after less than five hours of deliberation. Sentencing for Virginia, 62, and Philip, 58, was set for Oct. 30 and prosecutors will be seeking about four years in prison for the Wayzata couple.

“We are pleased with the jury’s verdict,” Freeman said. “They were able to see that this couple stole money for the project to buy themselves expensive cars, snowmobiles and to keep up two homes. They did it by funneling money through a company they owned which wasn’t doing work on the project while failing to pay the companies that had done work on the development. Their theft also played a role in the demise of First Commercial Bank of Bloomington.”

The couple was each charged in 2011 with five counts of theft by swindle over $35,000 for crimes that occurred from October 2007 through May of 2008. According to the criminal complaint and testimony during the trial, Philip and Virginia Carlson were the developers and general contractors of the Amber Woods commercial office building development at 2060 Wayzata Blvd. W. in Orono.

First Commercial Bank agreed to loan $6.4 million and nearly half of that was loaned out before the project came to a halt in 2008.

Work began on the Amber Woods project in 2007, as did the swindle. For instance, in Oct. 2007, the Carlsons, through their general contractor company, submitted an invoice and a lien waiver from Sundblad Construction for nearly $174,000 in order for the Carlsons to access the loan money to pay the subcontractor.  However, the invoice was not prepared by Sundblad, nor was the lien waiver. Testimony showed they were prepared by Virginia Carlson. Likewise, the signatures on both documents were not those of the owner of Sundblad Construction.

That scam was repeated several times. However, when subcontractors started to complain about not being paid, the bank told the Carlsons that from now on the checks from the loan would no longer be made out to Carlson’s company and the subcontractor, but just the subcontractor.

So, the Carlsons began submitting invoices for work done by Logan Ryan. What no one knew was that Logan Ryan was a company owned by the Carlsons that performed no work on the project.

“So they came up with a new scheme,” Assistant Hennepin County Attorney Emery Adoradio said in his closing argument Tuesday. “They had false invoices to Logan Ryan saying they did the framing… In short, Logan Ryan in the Amber Woods project was a sham. It was concealed from their (the Carlsons’) partners, it was concealed from the bank. Logan Ryan did not do any work. Philip and Virginia Carlson used Logan Ryan to steal from the bank. It was an artifice, a trick.”